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Risk-Based Pricing Rule Page 4 Cash Flow: The Key to Staying Afloat Page 6 Auction Industry Report Page 12

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OIADA, P.O. Box 6905, Moore, OK 73153 OK_1210.indd 1

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INSIDE

MAGAZINECONTENTS 4 6 12 15

Risk-Based Pricing Rule Cash Flow: The Key to Staying Afloat Auction Industry Report The Privacy Factor Dealers Face

CMD Classes Dealers who demonstrate commitment and support the principles and ethical business standards of the CMD® designation complete a four-day seminar that addresses Business Management, Merchandising, Financial Management, Human Resources, and Business Planning. Northwood University provides the instructor and awards 4 Continuing Education units for this course. The next class will be March 10-12 at the SuperMedia Hotel and Conference Center at DFW.

ADVERTISERSINDEX Albright Insurance............................................................ 7 America’s Auto Auction......................... Inside Back Cover AutoTrader.com.................................................................5 Dealers Auto Auction of OKC ........................ Back Cover Insurance Solutions .........................................................15 Jordan Insurance Group...................................................9 Loftis Wetzel Insurance ...................................................17 Manheim Advantage............................................... 12, 13 Manheim North Texas............................Inside Front Cover SmartAuction...................................................................11

OIADAOFFICE 813 NORTHWEST 34TH MOORE, OK 73160

EMAIL: odell.morgan@sbcglobal.net ROSE & ODELL MORGAN, Executive Directors JACKIE GARNER, Office Manager

AMBER SNOOK, Administrative Assistant

STEVE MORGAN, Consultant

JARED MORGAN, Electronics/Software Technician

MIKE MORGAN, Technical Aide

LYNNA KAY, Programmer

FOR INFORMATION ON HOW TO BECOME A MEMBER OF OIADA PLEASE CONTACT ROSE OR ODELL MORGAN AT 405-232-2947.

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV NIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM. Dealers’ Resource is a publication of Automotive Dealers Resource of Oklahoma (ADR) produced on behalf of the Oklahoma Independent Automobile Dealers Association (OIADA), P.O. Box 6905, Moore, OK 73153. The Dealers’ Resource is published monthly by the National Independent Automobile Dealers Association Services Corporation. Periodical postage paid at Arlington, TX, and at additional offices. POSTMASTER: Send address changes to OIADA, P.O. Box 6905, Moore, OK 73153. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of ADR of Oklahoma, the Oklahoma Independent Automobile Dealers Association or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of OIADA or NIADA does not constitute an endorsement of the products or services featured. Copyright © 2010 by O&R Morgan, Inc. dba OIADA. All rights reserved. Dealers’ Resource is a publication of Automotive Dealers Resource of Oklahoma on behalf of the Oklahoma Independent Automobile Dealers Association (OIADA), but is mailed to all dealers in the state in an effort to educate and encourage non-members to join the Association and support our efforts to improve the image and profit potential of the industry. For 55 years, we have worked to represent the independent motor vehicle dealer in Oklahoma. We need your support. STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com FRONT COVER BY Mike Morgan EDITOR Mike Harbour • mharbour@niada.com PRODUCTION MGR. Jacob Kerns • jacob@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing

Board of Directors PRESIDENT John Easttom Auto Mart of Elk City P.O. Box 981 Elk City, OK 73648 580-225-1100 automart@cableone.net CHAIRMAN OF THE BOARD David Rath Altus Main Street Motors P.O. Box 603 Altus, OK 73522 580-477-2272 mainstreetmotors@sbcglobal net SECRETARY/TREASURER Bruce Beam Dealers Auto Auction of OKC 1028 S. Portland Oklahoma City, OK 73147 405-947-2886 www.daaokc.com

VICE PRESIDENTS John T. Longacre, IV Taft Motors, Inc. 722 S. Linden Street Sapulpa, OK (918) 224-7700 taftmotorsinc@msn.com Julian Codding Reliable Motors, Inc. 9201 S. Shields Oklahoma City, OK (405) 912-5000 juliancodding@msn.com Monte Shockley Shockley Auto Sales 2605 N. Broadway Poteau, OK 74953 918-647-3999 sas@clnk.net

Chris Goad Regal Motors 3515 N. May Oklahoma City, OK 73112 405-917-5800 managerokc@regalcars.com Glenn McDaniel I-35 Credit Auto 1113 SE 51st Street Oklahoma City, OK 73129 405-670-4100 David McQuerry McQuerry Motors, Inc. 1302 N. Harrison St. Shawnee, OK 74801 405-273-8171

A New Year Message For many auto dealers in the business of providing transportation to the public, 2010 has been a year of searching for answers and new opportunities. Survivors

in the business have come through the year having overcome challenges in belt tightening, policy reviews and “outside the box” maneuvers that have made their operations leaner and more effective. As survivors, they are better prepared to face monetary and regulatory challenges that are already presenting themselves for 2011. For 2012 and beyond, the federal regulatory mill is currently grinding out rules to implement several recently enacted laws that will impact the industry, including the onerous Dodd-Frank Act creating the Consumer Finance Protection Bureau (CFPB), which will subject Buy Here-Pay Here dealers (and other dealers yet to be determined) to regulations similar to those regulations meant for banks and finance companies. Those dealers exempted from the CFPB will be subject to the Federal Trade Commission’s expanded rulemaking authority. Then there’s the so-called Toyota Bill which, if enacted, will require dealers to provide a written notice to a vehicle purchaser or lessee of any recall notices prior to retailing the vehicle. Then there’s the Health Care Bill that requires all businesses to provide an IRS Form 1099 to each product provider from which the business pur-

chases products or services in the amount of $600 or more in a year’s time. There’s a host of other requirements, some of which are as yet unknown. Fortunately, the independent used motor vehicle industry has NIADA and the firm Federal Advocates together with Keith Whann, NIADA’s legal counsel, working for us in that arena. They are meeting regularly with lawmakers and regulators explaining the impact that regulatory actions can have on the industry and the best way to achieve their objectives without killing the business. We can only hope recent campaign messages from the public have provided elected officials who represent us and our industry in the nation’s capitol with a better understanding of the importance of the free market system (especially the independent used car industry). Hope that they understand the public’s reques t for them to create a regulatory and tax atmosphere that is conducive to a prosperous business climate, then get out of the way and let us bring prosperity back to the country. Now, in spite of all that, the OIADA Board members and staff take this opportunity to wish each of you and your families a very Merry Christmas, a Happy Holiday Season and a prosperous New Year! We have faith that American ingenuity and the industrious nature of our people will set things right. 3

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By ADR Staff

RISK-BASED PRICING RULE What it is and How it Affects Dealers The Federal Trade Commission’s (FTC) Risk-Based Pricing Rule (RBPR) that requires dealers to notify a customer who’s credit score is lower than a majority of the dealer’s other customers takes effect Jan. 1, 2011. The rule has

many dealers still searching for answers. Who is required to provide a RBPR Notice? These notice requirements apply to any person that both (1) Uses a consumer report in connection with an application for, or a grant, extension, or other provision of, credit to a consumer that is primarily for personal, family, or household purposes; and (2) Based in whole or in part on the consumer report, grants extends, or otherwise provides credit to the consumer. In general — The term “consumer report” (credit report) means any written, oral, or other

The term “credit score” – means a numerical value or a categorization derived from a statistical tool or modeling system used by a person who makes or arranges a loan to predict the likelihood of certain credit behaviors, including default. If a dealer engages in risk based pricing, there are basically three safe harbor notice options available. To benefit from these provisions of the law, a dealer must make use of the model forms as described in the rules using one or another of those options. A dealer is required to either send a Risk-Based Pricing Notice to certain customers or a “Credit Score Exception” notice to all credit applicants, and that’s where it can become confusing. The dealer is responsible for providing a notice to his customers if the dealer is involved in the finance contract either directly or indirectly. The trigger for sending a notice is the pulling of a credit report to determine whether to finance a customer and then, based in whole or in part on that credit report, the dealer provides credit to the consumer on material terms (defined as annual percentage rates [APR]) that are materially less favorable than the most favorable material terms (APR) available to a substantial portion of that dealer’s customers.

>> For example:

communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for credit or insurance to be used primarily for personal, family, or household purposes; Exclusions — The term “consumer report” does not include any report containing information solely as to transactions or experiences between the consumer and the person making the report, or communication of that information among persons related by common ownership or affiliated by corporate control. A risk-based pricing notice is applicable to customers who get credit but on less favorable terms as a result of their credit score.

If you increase the APR, based on a credit report score, you must provide a General Notice: • If you use the Direct Comparison Method, to those applicants who received a “materially less favorable” APR than the APR granted to a “substantial proportion” of your other applicants; or • If you use the Credit Score Proxy Method, to those applicants who fall below your 40/60 “cut-off score;” or • If you use the Tiered Pricing Method, to those applicant in the bottom 60-70 percent of your tiers. Or, in lieu of providing a General Notice: • You may simply provide a General Credit Score Disclosure Exception Notice to all applicants. • An auto dealer that is not the creditor to whom the loan is initially payable may use its own score or the score used by the lender. • If you cannot obtain a score for the consumer, provide a No Score Available Exception Notice. If data from the credit report is only used in determining whether to offer credit to a consumer and is not used to determine the APR that will be applied to the consumer’s credit, then a

A DIFFERENT FORM MUST BE SENT TO CUSTOMERS WHO DON’T HAVE A CREDIT SCORE. Risk Based Pricing Notice is not required. If, based upon the credit report, a consumer is turned down or not offered credit, the dealer is then required to provide an Adverse Action Notice to the consumer, which is another issue addressed elsewhere in this newsletter. If the “Credit Score Exception ” is used, a dealership must include the customer’s credit score and identify the source of that credit score. One must also include the date of the credit score and use the model form disclosure language. The notice must include either a bar chart (graphic) or language showing where the customer falls in the range of credit scores of the dealer’s other customers. A copy of the FTC two-page B-4 Credit Score Exception Notice is included elsewhere in this newsletter for your information. A different form must be sent to customers who don’t have a credit score. The Credit Score Exception Notice is not conducive to preprinting because of the variations in data that each separate notice will require. However, the data required in both the Risk-Based Pricing Notice form and the form used for customers where there is no credit score available is such that ADR staff is able, after consultation with the dealer, to personalize and preprint those forms. On these forms, as with the privacy disclosures described in another article in this newsletter, there will be a onetime setup fee (we believe at this printing to be $20). But we are still negotiating for the best print prices for the personalized Risk Based Pricing forms. We will have those prices by the time you get this newsletter. E-mail the ADR staff at odell.morgan@sbcglobal.net for a quote. Penalties are steep for violations of this act, but ADR can help you avoid those penalties. The FTC can obtain injunctive relief and penalties of $3,500 for each known violation that is part of a pattern or practice of violations. FCRA § 621(a), 15 USC § 1681s(a); 16 C.F.R. § 1.98(m) (adjusting civil penalties under the FCRA from $2,500 to $3,500). Section 615(c) of the FCRA, 15 USC § 1681m(c), provides a company cannot be held liable for a violation of the Risk-Based Pricing Rule if it can show by a preponderance of the evidence it maintained reasonable procedures to assure compliance with the Rule. There is no private right of action under the FCRA for violations of the RiskBased Pricing Rule.

OUR MISSION: YOUR SUCCESS

This article is intended for information only – it has no legal application. For its application to your dealership, you are requested to contact your legal advisor.

DEALERS’

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CASHflow

the Key to Staying Afloat Your Dealership’s Life Preserver in a Turbulent Economy Business was strong for well-established Central Oregon Motors in rural Redmond. Sales grew steadily in the seven years since owner and car business veteran Dan Nicholson purchased the dealership, and he was confident about its new branding campaign.

“Half of what the dealership sold was trucks, so I started commercials at the end of 2007,” said Nicholson, who spent thousands of dollars on television and print advertising. “The commercials had the slogan, ‘The biggest little dealership in town,’ meaning we weren’t the biggest in size but we had the most trucks.” Just as the dealership’s commercials hit the airwaves and presses, disaster struck. Gas prices skyrocketed to $5 a gallon for unleaded in Oregon and rose even higher for diesel fuel. “It was like someone turned off a light switch,” Nicholson said. “My trucks were worth half of what I paid for them on the wholesale market, and that’s if I could even get rid of them. Nobody wanted trucks, especially not diesels.” To keep his dealership afloat, Nicholson borrowed from all sources he could, including the equity on his home; and slashed the dealership’s expenses to stop the bleeding. That included layoffs and convincing the dealership’s remaining employees to accept salary cuts. Amidst the pain and penny-pinching, Nicholson realized how much he’d ignored the importance of cash flow. The mistake nearly cost him the dealership on several occasions in the months to follow. Now, in addition to $300,000$400,000 in inventory, the dealership maintains another $30,000-$50,000 for cash flow, he said. Unfortunately, Nicholson’s experience isn’t unique. And with the ongoing scramble to secure sales with fewer newer cars available in the

still-troubled economy, many dealers face similar dire issues now or could in coming months, said Chris Leedom, founder and president of The Leedom Group, a Sarasota, Fla.-based consultancy specializing in pre-owned car sales, special finance and buy here-pay here. “There are a lot of dealers who don’t even produce monthly financial statements; they do them once a year when it is tax time, or they just don’t worry about them,” he said. “But, the smartest thing you can do is produce monthly financials to get a good idea of how the dealership performed; that way, you aren’t surprised and you can plan ahead.” Leedom said the industry is in its worst period in 25 years, and nearly every dealership can and must trim expenses. Maintaining at least one to two months of operating capital reserves is vital. “Really assess the financial health of your business, recognize issues and make adjustments that are necessary so you can ride out the storms when they occur,” he said. “You are never 100 percent; you are always making adjustments and reacting to the market.” Job cuts may not be necessary in a financial downturn, but restructuring pay plans, even for upper management, and tying bonuses to performance are advised by Leedom. Also scrutinize reconditioning expenses, which increase quickly. Leedom, who expects sales in 2011 on par with the past year but with more regulatory concerns and increased costs, said dealers in the high-end Buy Here-Pay Here (BHPH) market in particular need to know how much cash their dealerships consume; if a dealer wants to sell 50-100 vehicles a month at the higher end, he must understand the cash demands. “It’s one of the few businesses where sales could actually be so good that a dealer could be threatened to go out of business,” he said. “It eats up so much cash that the dealer could find himself broke.” Dealer Chris Martin, president of E-Z Auto in Fayetteville, N.C., said he’s seen many new owners make the mistake of purchasing toys for themselves, instead of saving money for their businesses’ down times. “There’s nothing wrong with toys, and you want to enjoy life, but you need to reinvest in your business to get the business as financially solid as possible and get rid of as much debt as quickly as you can,” Martin said. “Once you are able to do that, you can take advantage of good situations that you can’t otherwise.” That could mean buying more vehicles at good prices from wholesalers, investing in technology or undergoing expansions. “Right now, we are trying to buy every vehicle we can if we think it’s a good buy,” said Martin, who purchases from wholesalers such as Cash-N-Carry in Dunn, N.C. The family owned dealership is less successful at auctions, where franchise dealers bid for the same vehicles. However, Martin travels to

CASHflow

DEALERS’

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DECEMBER 2010

auctions as far as Tidewater, Va., to find deals. “We’ve been able to increase our equity in the business every year,” said Martin, co-owner of the business with his father, Buddy, who opened the dealership near Fort Bragg in May 1992. The BHPH dealership has 13 employees. It sells about 30 cars a month now, but sold as many as 40-50 cars per month just 10 years ago. Still, an aggressive collections program helps the dealership maintain cash flow even during slower sales periods. E-Z offers loans at 36-month terms or less, and the average cash value is between $5,000 and $5,500. To ensure timely loan payments, E-Z uses a payment assurance system that includes a starter interrupt program with GPS. The starter interrupt prohibits vehicles from starting if payments are more than a few days overdue. “We aren’t trying to strong arm anybody,” said Martin, a NIADA Certified Master Dealer (CMD) and vice chairman of the NIADA Services board. “As long as they are working with us and they are telling us the truth, we are going to do the same. We are normally able to work out any situation if we are communicating.” Many of E-Z’s customers can’t get vehicles from other dealers because of prior repossessions, bankruptcies or other credit issues. Still, they need solid, dependable vehicles such as the Kia Spectrums, Chevrolet Malibus and Jeep Grand Cherokees offered on the dealership’s two-acre lot. “When you are dealing with a consumer who has had credit issues in the past, it’s hard to change those habits,” Martin said. “If you can get them to pay you reasonably on time for 36 months, you’ve done a really good job.” Because there are fewer finance options for customers with damaged credit these days, E-Z doesn’t lose them to other creditors for original loans, refinancing or trades as often. “(Revenue is) probably going to by up 10-12 percent over last year and I would hope to see us up another 10-12 percent in 2011 if things continue to improve in the overall economy,” Martin said. Leedom supports aggressive approaches in a weak economy. “(Dealers) can look at all that’s going on as the glass half full or as the glass half empty,” he said. “The good news is, if you are able to survive these times, your dealership is clearly one of the stronger dealerships and has weathered another storm, and that bodes well for your business.” That certainly describes Nicholson and his dealership, which boasts three employees and improved revenue. He will hire a business manager and possibly a mechanic in the spring. Nicholson, also a CMD, has vowed never to borrow money again, except for flooring, and now has mix of cars, trucks and sport utility vehicles on his lot. SUVs, 2005 and older, and Toyotas produced between 2007 and 2009 are popular with his rural clientele. CONTINUED ON NEXT PAGE

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CASHflow

“I’ve never had a Toyota car on my lot that I didn’t sell,” said Nicholson, whose dealership doesn’t offer in-house financing but works with several banks to help customers secure loans. Nicholson raised the actual cash value of his units to $12,000 from $8,000, and the change attracted older customers. He keeps roughly the same number of vehicles – 30 to 35 – in stock, selling about 20 to 25 each month. “I try to keep a balance of what seems to work,” Nicholson said. “One of the counties right next to us has 17 percent unemployment, and our county, Deschutes, has about 13 to 14 percent unemployment and the housing market is really weak. “I’ve just learned to be profitable with what I’ve got. Business was up 20 to 25 percent this summer, which was helpful.” He reassessed the business throughout most of 2009. That’s when Nicholson learned to purchase vehicles like his customers. “When I went to auctions, I didn’t even pull out my (Kelley) Blue Book; in fact, I haven’t taken a Blue Book to an auction in two years,” he said. “Instead, I’ll get a list of the vehicles I want to buy and then go on the Internet and see what they sell for, and buy them in relation to that.” It retrained him to consider the retail market. “Eighty to 90 percent of buyers now look on the Internet first,” said Nicholson, who was elected first vice president of the Oregon Independent Auto Dealers Association’s executive board recently. “When I looked at the Internet first before buying a car, it was amazing the difference and how much of a better buyer I became. “It’s amazing that I’ll go to an auction and have a vehicle picked out, then go on the Internet and see what they are selling it for. Then, that vehicle will sell for just as much money, if not more, at the auction then it was on AutoTrader; sometimes I scratch my head because there are three of the same vehicle selling for cheaper on AutoTrader, and that makes a huge difference.” Following his CMD training on how to reduce wholesale losses, Nicholson also gets rid of vehicles in 60 days by pricing them below what else is on the Internet. Nicholson offers his insight to ward off financial disaster in difficult times. “My advice is not to grow too fast,” he said. “Instead, take your time, save money and keep your expenses low. As you make money, use cash to do any expanding; don’t borrow money to grow. “Once you’ve been in business a year, learn to live off the leanest month you have and make that leanest month your budget. Then, when you have good months, use the rest to invest in your business,” according to Nicholson. “It can be difficult. But, in long term, keeping everything small and simple, allows you stay in business during the lean times.”

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REPORT 2010 LOBBYING REPORT • 2010 LOBBYING REPORT • 2010 LOBBYING REPORT

Federal Advocates October 2010 Lobbying Report “Wall Street/Consumer” Financial Services Reform Bill

On November 17, NIADA General Counsel Keith Whann and Federal Advocates will be meeting with staff of the FTC as a followup from the September 21 meeting. A series of questions have been provided to NIADA for discussion at the November session. To review, on September 21, Whann and Federal Advocates met with staff of the Federal Trade Commission (James Dolan, assistant director; Carole Reynolds, senior attorney, Division of Financial Practices; Rebecca Kuehn, assistant director, Division of Privacy and Identity Protection; Katherine Worthman, attorney, Division of Financial Practices; and Daniel Hanks, attorney, Division of Marketing Practices) regarding implementation of the above bill and its impact on the auto industry. Following discussion of various issues, with Whann leading the discussion and answering various questions as to how the auto industry works (including the auction practice itself), it was decided to schedule a follow-up session to allow for a more detailed discussion of issues. To review further, on July 22, President Obama signed into law the so-called Wall Street Reform Bill. As reported previously, the new law exempts certain auto retailers from increased oversight with respect to dealer-assisted financing. To get to that result, advocacy activities included numerous meetings, strategy phone conference calls, letters, talking points, legislative alerts, etc. The law does grant increased powers to the FTC regarding dealer oversight. Also, it requires coordination with the Department of Defense to ensure that service members and their families are treated fairly by automobile dealers.

Senate Motor Vehicle Safety Act of 2010

version of the bill exempting wholesale transactions from the section’s application. While an initial victory, the remaining provision is still very troublesome and we continue to advocate on behalf of NIADA’s interest pending further action on the Senate bill as well as a possible House companion bill. The latest Senate draft and the companion House bill (H.R. 5381) are being reviewed by NIADA.

Small Business Jobs and Credit Act of 2010

On September 23, the House passed the Senate-passed bill, which includes an increase in the amount the Small Business Administration’s (SBA) Dealer Floor Plan Financing program can guarantee. This permits the SBA to guarantee bank and finance company loans up to $5 million, which should help, the committee believes, expand dealer access to floorplan lines of credit. We worked with Louisiana Democrat Sen. Mary Landrieu’s Committee and personal staff in conjunction with others on this. This bill may be the subject of subsequent meetings with the Hill and the SBA on how the program “really works!”

White House Reform Request

On September 23 and September 29, Federal Advocates was contacted by the White House, which is still trying to organize and schedule a meeting to include “people who are working to set up the CFPB.” This meeting is in response to a letter sent by NIADA to President Obama requesting “the opportunity to work with you to reform our industry in common-sense ways that achieve real safeguards for consumers, that promote accountability and transparency, and that really work.”

Department of Defense

NIADA is reviewing the above bill pending possible Senate Floor action in November or December. To review, on June 9, the Senate Committee on Commerce, Science and Transportation marked up and reported S.3302, the so-called Toyota Bill. In earlier drafts of the bill and just prior to markup, language was included (section 310) which would have specified that a dealer may not sell or lease a used passenger motor vehicle (both wholesale and retail) until the dealer first notifies the purchaser or lessee in writing of any recall notices. Working primarily with Sen. John Thune, R-S.D., his staff (Brenden Plack), and committee staff (Alex Hoehn-Saric and Chris Herndon), and as a result of concern raised by Keith Whann and his proposed suggestion, language was included in the final reported

Regarding the issue of “how to ensure that service members and their families are treated fairly by automobile dealers,” Whann and Federal Advocates also met on September 21 with the Defense Department’s Frank Emery in the Office of Personal Finance, Family Policy Outreach Directorate. Whann relayed a specific example of how he helped a service member at Fort Bragg on an automobile situation working with the base JAG office and others. He also talked about his plan for a special program to teach dealers on how to deal fairly with service members and their families. Emery mentioned a November conference in Denver where Keith could give a presentation. DOT continues to remain interested in looking for opportunities where Keith could lend his expertise. Details are to be finalized at a later date.

NIADA.COM

ALL NEW FOR YOU! NIADA has unveiled a brand new website that’s easy to navigate and offers many new technologically-advanced features for dealer members. Among them:

• The entire NIADA membership roster is now included on the home page via a state map, and dealer members can opt-in to add more contact info to their online membership listing. • All state magazines published by NIADA can now be viewed inclusive of advertisements. The magazines also will be archived on the site. Plus, those same state associations will have direct links from their websites to our site promoting readership of their particular state magazine. To view these magazines go to http:// www.niada.com/state_magazines.php • NIADA National Corporate Partners (NCP) will now have the ability to add a company or product-specific video next to their NCP description. • NIADA’s new dealer social network will be unveiled early 2011.

DEALERS’

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CAUTION!!!

Touching an odometer is like touching an electric wire. It can be shocking!

Oklahoma Statutes, Title 47, §12-503. Prohibited acts No person shall:

1 a dvertise for sale, sell, use or install or cause to be installed or request for installation, any device which causes an odometer to register any mileage other than the true mileage driven; 2. disconnect, reset or alter, or cause or request to be disconnected, reset or altered, the odometer of any motor vehicle with intent to change the number of miles indicated thereon; 3. knowingly operate a motor vehicle with a disconnected or nonfunctional odometer on any street or highway with the intent of misrepresenting the true mileage drive; or 4. conspire with any other person to violate any section of the Odometer Setting Act.

B. N o person shall:

1. f ail to adjust an odometer or affix a notice regarding such adjustment as required by subsection A of this section; or 2. remove or alter any notice required by subsection A of this section to be affixed to a motor vehicle, with intent to misrepresent the true mileage driven. Oklahoma Statutes, Title 47, § 12-506 Violation-Penalty

Any person convicted of violating any of the provisions of the Odometer Setting Act with intent to misrepresent the true mileage driven on a motor vehicle shall be guilty of a misdemeanor and shall be punished by a fine of not more than Ten Thousand Dollars ($10,000) or imprisonment for not more than one (1) year, or by both fine and imprisonment.

Oklahoma Statutes, Title 47, § 12-504. Service, repair or replacement of odometer

The OIADA will provide odometer replacement stickers FREE to members on an as needed basis. The stickers are to be affixed

A. N othing in the Odometer Setting Act shall prevent the service, repair or replacement of an odometer, provided the mileage indicated thereon remains the same as before the service, repair or replacement. Where the odometer is incapable of registering the same mileage as before the service, repair or replacement, the odometer shall be adjusted to read zero and a notice in writing shall be attached to the left door frame of the vehicle by the owner or his agent specifying the mileage prior to repair or replacement of the odometer and the date on which it was repaired or replaced.

to the “B” pillar of the vehicle. Following is what the sticker looks like:

E L P M A X E THE ODOMETER ON THIS VEHICLE HAS BEEN REPLACED.

MILEAGE AT REPLACEMENT (OLD): __________________________

MILEAGE AT REPLACEMENT (NEW): __________________________ REPLACEMENT BY: _____________________________________

DATE OF REPLACEMENT: __________________________________ TO BE INSTALLED ON THE “B” PILLAR.

NEVER TO BE REMOVED.

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LICENSE APPLICANTS APPROVED The following applicants, as listed in the Agenda for the Used Motor Vehicle and Parts Commission Regular Meeting of October 12, 2010, were considered for issuance of used motor vehicle dealer licenses and wholesale vehicle dealer licenses. The applications were approved pending compliance with the State licensing laws and rules, and subject to final approval by Commission staff.

USED DEALER LICENSES COMPANY

Aubrey Automotive Autos by Tim Blue Sky Wholesale Motors, LLC C & C Motors Champion Motors Conner Used Cars Cycle Ward, LLC Gray’s Motors, LLC Hudiburg Subaru, LLC Lowest Price Auto Parts & Sales, LLC Macs Car & Truck Sales Morris Muscle Cars, LLC Shamrock Auto Sales Sooner Fleet Auto Sales #2 Travel Time RV, LLC

NAME CITY Lora J. Aubrey Lawton Andrea Kalmykov Oklahoma City Larry Sheperd Wister Clyde J. Davis Oklahoma City Todd Goings Edmond Stephen Conner Lawton Misty J. Silver Enid Mark Goodson Tulsa Steve Hudiburg Oklahoma City Mohammad Momennia Oklahoma City Calvin Gaston Grove Jerry Morris Chickasha John Sharp Tulsa Stanley A. Coppinger Sapulpa Floyd D. Dunagan Oklahoma City

September 2010

OIADA NEW AND RENEWAL MEMBERS

The following list includes members who joined or renewed their OIADA/NIADA membership during September. We express our sincere appreciation for all the members of OIADA and we extend our invitation to dealers who are not members. A membership application can be found elsewhere in this newsletter. We urge you to be an active part of maintaining a strong and effective used car industry voice in the legislative and regulatory environment. With the current Congress, we need that voice more than ever! John Easttom, President COMPANY

R R R R R R R R R R R R R R R R R R R R R R R R

NAME JOINED CITY Carl’s Auto Sales Carl Curtis Whitlock 1991 Poteau Mangum Auto Sales Jacky D. Mangum 2000 Duncan Doug’s Auto Deals, LLC Doug’s Auto Deals, LLC 2004 Grove Floorplan Xpress Autos Craig Owen 2004 Oklahoma City Glen Rabe Motors Glen Rabe 1993 Ardmore Morris Auto Sales Russell Casey 1991 Morris England Ford, Inc. Ricky C. England 2007 Hinton Nix Auto Center Nix Chevrolet-Olds-Cadillac, Inc. 2009 McAlester Carter County Dodge Chry., LLC Michael L. Henry 2007 Sand Springs Henryetta Ford Ranch Henryetta Ford, Inc. 2007 Henryetta Danny Beck Chevrolet, Inc. Danny Beck Chevrolet, Inc. 2009 Tulsa I-35 Credit Auto Glenn McDaniel 2002 Oklahoma City Bolen Used Cars, Inc. Don Bolen 1994 Oklahoma City Solutions Auto Group Joe Powell 2008 Chickasha Power Auto Sales, LLC Richard L. Power 2007 Broken Arrow Shockley’s Auto Sales, Inc. Monte Shockley 1995 Poteau Taft Motors, Inc. John Longacre 1996 Sapulpa Tompkins Motor Co., Inc. Joe Dale Tompkins 2000 Pauls Valley Kent’s Custom Cars & Trucks, Inc. Kent Smalygo 2000 Collinsville Ben’s Auto Sales Abi Golsorkhi 2009 Warr Acres Credit Connection Auto Sales, Inc. Charles West 2002 Midwest City Auto Dimensions Abdol Lai Aliabadi 2005 Moore CarMax The Auto Superstore Michelle Halasz 2005 Richmond VA Drive Time Car Sales, Inc. Drive Time Car Sales 2009 Phoenix AZ

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National Auto Auction Association Auction Industry Report ECONOMY: SLOWDOWN?

The recovery started strong as businesses rebuilt inventories after slashing them to extremely low levels in anticipation of a worse recession than actually occurred. This is typical during business cycles, as firms do not know how bad things will get and overreact to protect themselves against the worst. Then economic growth slowed as inventories were brought into balance with sales. A slowdown in growth at this stage of the recovery also is fairly typical, as the growth driver moves from inventory building to housing, consumer spending, and business investment.

While consumer spending has not been as robust as in some past recoveries, it has been growing at a modest pace and business investment has been relatively strong. Lack of growth in housing, related to the extreme amount of overbuilding that was a major cause of the recession, has been a significant factor holding this recovery back. In addition, the uncertainty associated with the election, taxes, and health care appears to be limiting employment gains to less than what would be expected with recent real GDP growth. As the uncertainty dissipates after the election and decisions on taxes and health care are made,

we should see a pickup in hiring and a decline in the unemployment rate. If this does not occur, the Federal Reserve is ready to provide more stimulus and, whatever the election results, politicians will act if the unemployment rate stays close to 10 percent. With less uncertainty and the beginning of a true housing recovery next year, we expect real GDP growth to average around 3-4 percent during the next two years. NEW VEHICLE SALES: SALES GAINS CONTINUE!

Third-quarter 2010 new light vehicle sales came in at an annual rate of 11.6 million units, the highest quarterly total in two years. On a year-over-year basis, the third quarter gain was only 0.6 percent above the Cash for Clunkersboosted third-quarter 2009 sales rate. New light vehicle sales have recovered sharply from the 9.5 million rate in the first half of 2009. However, we will not likely see the 16 million rate the industry averaged from 1994 to 2007 until the unemployment rate moves down to around 6 percent (probably not before 2014). USED VEHICLE SALES: SALES FLAT!

Third quarter 2010 used vehicle sales were flat with last year as September sales fell 5.6 percent after being up 3.6 percent in the first half. AUCTION VOLUME: VOLUME WEAK!

Auction volume continued declining in the third quarter at about the same rate as in the first half, as a small gain in dealer consignment was not enough to offset large declines in the fleet/

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3rd quarter

National Auto Auction Association Auction Industry Report lease and manufacturer/factory categories. Since Prices were flat with last year in the third quarter, gross value declined at about the same rate as volume Regions: Third quarter volume in the Northeast was relatively stronger than in the other regions for the second quarter in a row. Unit volume in the Southeast and North Central were both down double-digit in the third quarter. TYPE: Dealer consignment volume was only

up 0.8 percent in the third quarter, the only sales type with an increase in each of the last three quarters. Reflecting weak past new sales, fleet/ lease and manufacturer/factory volume declined in the third quarter by 17.2 percent and 25.5 percent respectively. The improving economy continued to result in reduced repos with a 24 percent decline in the third quarter, after a 32 percent increase in 2009.

Source: AuctionNet from NADA

Auction data come from a number of different sources and may not always appear to be consistent. In order to provide the most useful and up-to-date information about the industry, we utilize data from the most appropriate sources and provide you with the underlying implications. Due to their relatively small size and volatility, certain sales types are not included in the above table.

SEGMENT: Although declining in the third

quarter, CUVs and passenger cars continued to be relatively strong, while other segments were down sharply. AUCTION PRICE: NO INCREASE!

After five quarters of year-to-year increases in the 4-10 percent range, auction prices in the third quarter were flat with last year. Year-to-date auction prices are still up 4.2 percent. The move up in auction and used car prices over the past year has brought the relationship between used and new car prices to a point where buyers see less benefit in buying a used car versus a new car - - putting a cap on used retail and auction price inflation.

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A Guide to Reasons For Adverse Action

Dealers are required to provide Adverse Action Notices to consumers when they play a role in a consumerâ&#x20AC;&#x2122;s credit being denied. Numerous options exist on adverse action notices for reasons for the action taken. In providing documentation to the applicant, provide the reasons in the order of prominence to the action taken. Provide all the main reasons for the action; however, providing more than four reasons should generally be avoided.

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IF YOU WILL PROVIDE US WITH YOUR E-MAIL ADDRESS, THIS PROCESS WILL BE MUCH QUICKER, EASIER AND MORE EFFICIENT

By ADR Staff

The Privacy Factor Dealers Face The new privacy rules of the FTC make your previous Privacy Notices obsolete and non-compliant. The new privacy notice forms, safe harbor models of which have been provided by the FTC, are intended to make it simple and easy for consumers to understand what information you collect from them, what you use it for, and how you protect that information. Un-

fortunately, the information a dealer is required to provide to achieve a safe harbor is not that simple or easy. For instance, each dealer’s notice must be configured to that dealership’s operation. One dealership’s notice will be different from all others notices. For ADR to configure and produce a privacy notice to conform to your dealership, we will need you to provide us with specific information regarding your collection, use, protection and disposal of the consumers’ private, non-public information. If you will provide us with your e-mail address, this process will be much quicker, easier and more efficient because it will allow you to fill out, on line, the five-page Privacy Worksheet

and review the proof of the completed form we submit to you once we have the worksheet information. The prompt exchange of information through the use of e-mail and completion of the worksheet online will expedite the ultimate printing and delivery of your personalized Privacy Notices. For those of you who don’t, for whatever reason, want to fill in the Worksheet using the web page version, ADR staff will be made available by appointment to take your information over the phone. On another note, we are including in this newsletter an example of one version of the safe harbor model Privacy Notices just for your information. The model forms are standardized forms, including page layout, content, format, style pagination, and shading. Only very specific modifications are permitted for dealerships seeking to obtain the safe harbor through use of the model forms. So you see, the model form may be simple for the consumer, it certainly is not simple for the dealer to construct. The new rules are effective Jan. 1, 2011. Time is running short! The ADR team is prepared to personalize your privacy notices, using the information

>>email US you provide on the worksheet. The model form must be printed on white or light color paper (such as cream) using black ink. Logos may be printed in color. There is a one time set-up fee of $50 to configure the form for printing using the information that the dealership provides. Most dealerships will only need a single sheet printed front and back. Unfortunately, the forms cannot be produced in bulk to save on cost because of the need to personalize each dealer’s privacy disclosures. However, at this writing, we are still negotiating for the best print prices we can. We will have those prices finalized by the time you receive this newsletter. You may e-mail us at odell.morgan@sbcglobal.net for a quote. OIADA/NIADA members get a 10-percent discount on those prices. E-mail us TODAY with your request for a Privacy Worksheet. We are here to serve you. ADR - Our Mission: Your Success This article is intended for information only – it has no legal application. For its application to your dealership, you are requested to contact your legal advisor.

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By Donald Barrand

GOOD INSURANCE COVERAGE

A SAFE BET With its strange jargon, complex coverages and exclusions, most of us find auto dealer insurance nearly impossible to understand. Add a

slew of regulations that differ from state to state and it can become a complete mystery. However, the most important thing to remember is a good insurance policy is one of the best investments an auto dealer can make. The right insurance not only protects you from potentially losing your business, it allows you to concentrate on what is most important -- growing your business. Insurance for auto dealers can be divided into three main categories: liability, inventory and property. Liability insurance protects against damage or bodily injury resulting from the way you do business. There are two types of liability insurance in a standard garage policy. Auto liability protects you against claims and suits arising from the operation of the vehicles in your inventory, whether driven by you, your employees or customers. So if a customer wrecks one of your vehicles during a test drive and does not have insurance of his own, you’re covered. Garage operations liability, meanwhile, covers you for accidents that do not involve vehicles in your inventory. Let’s say a customer slips on a puddle of transmission fluid. You’re covered. For most auto dealers, inventory is their largest asset. Dealer open lot insurance covers physical damage to the vehicles on your lot. If there’s a hail storm, for instance, your vehicles are covered. Or, if a vehicle is stolen from the lot, you’re covered. In addition, dealer open lot covers vehicles in your inventory while being test driven if they are involved in a collision Property insurance covers your building and its contents. If your building is knocked down by a tornado, you’re covered. If there is a fire in your garage, you’re covered. Property insurance can also cover CONTINUED ON NEXT PAGE 16

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loss of income and extra expenses incurred to get back into business quickly. Insurance premiums are based on risk. The more vehicles you have on your lot and the more valuable your buildings, the more you will have to pay for insurance. If your lot is in an area prone to flooding, expect to pay more. Yet when you consider the protection it provides, insurance is an excellent value. Here are some tips to make the most of your insurance dollar: Don’t undervalue your inventory. If the vehicles on your lot are worth $300,000, don’t value them for $200,000 thinking you’re going to save a lot of money. You won’t. The difference in premium is miniscule. The difference in what you will collect on a claim could be significant. Don’t insure your personal vehicles under your dealer’s insurance. Personal auto and dealer auto are two completely different coverages. There are big gaps in the protection they provide and your losses might not be covered.

Don’t confuse theft coverage with false pretense coverage. If a customer test drives your vehicle and doesn’t bring it back – it is not considered a theft, and therefore not covered unless you had false pretense coverage on your policy. If you offer customers financing, you should buy errors and omissions coverage for truth-in-lending laws as well as the Fair and Accurate Credit Transaction Act (FACTA) which goes into effect at the end of 2010. A minor data breech exposing a customer’s personal information could result in a lawsuit that could potentially put your business in jeopardy. Make sure your insurance company has an A.M. Best rating of at least A- or better, and a Fitch or Moody’s IFS rating of at least BBB (Good), or preferably A (Strong) or better. Your agent should be able to tell you the insurance company’s rating. What good is insurance if your insurance company can’t pay a claim? Auto dealer coverage is highly specialized. Talk to a few agents to determine who understands your

business best and can provide the most comprehensive policy. Seek out an agent who can provide you with a program developed especially for auto dealers. Your local NIADA chapter should be able to provide you with a list of agents. Make sure your agent explains what coverages he or she is able to provide and that you understand what you’re buying. Ask questions until you are completely satisfied you understand what the policy you are buying covers and does not cover. Good insurance enables you to stop worrying and concentrate on selling.

HERE ARE SOME TIPS TO MAKE THE MOST OF YOUR INSURANCE DOLLAR:

Don Barrand, transportation practice leader at V3 Insurance Partners, is a 34-year veteran of the insurance industry. More than 20 of those years were spent specializing in commercial auto and Don was a pioneer in the development of insurance programs designed for new and independent dealers. Don may be reached at 913297-7468 or don.barrand@ v3ins.com.

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Used Motor Vehicle

& Parts Commission Report

Following convening of the meeting and approval of the Minutes of the previous meeting, Chairman John Longacre called on Director John Maile for the Director’s report.

Maile began his report by explaining that the budget had been submitted and copies were available upon request. Maile had the expenditures report distributed and asked for its approval. He went on to say Deputy Director Kenneth Whitehead was off duty and that in his report, there were three cases pending in District Court. One case was against John Cornelius with Oklahoma Wrecker and Equipment for failing to have a used dealer license. Another was against Hugh Grayson for buying cars out of the salvage pools and selling them without a license. The last case was against Country Classic Homes for taking money for mobile homes and failing to deliver the homes. This dealer’s bond was cancelled. Additional information in the Report included seven informal hearings which resulted in the following fines being assessed against dealers: Bob Howard Auto Group, $100 for a late title; Car Mart, $500 for five improper title reassignments; AutoMax (two locations), $400 for two late titles and improper use of two temporary tags; Auto Connection, $300 for misuse of three tags; Carsmart, $300 for unlicensed display of vehicles; Top Line Auto Sales, $500 for improper use of tags; Best Price Auto Sales $300 for one late title and improper use of two tags. The Report also indicated Commission staff had issued cease and desist letters to 10 used dealers, two dismantlers, and four insurance pool violators (a listing of those letter recipients is included following this report). Investigators completed 40 inspections for the period. Staff handled 49 written complaints, 13 of which were title issues, 24 had to do with contract violations, four were related to mechanical issues, and there were eight complaints of a miscellaneous nature. For the period, the Commission education program had 41 in attendance. Applicants for a new license and dealers involved in significant Rule violations are required to attend the Commission’s education program as a part of acquiring or maintaining a State license. Until further notice, these education sessions are being held at the Commission conference room at 2401 NW 23, Oklahoma City. Classes are held on Monday prior to the Commission meeting on the second Tuesday of each month. The sessions run from 9 a.m. to about noon or 1 p.m. You are asked to make reservations so staff can be prepared to accommodate you. You should call the Commission at 405521-3600 to make your reservations.

OCT. 12, 2010

REPORT OF CEASE & DESIST LETTERS ISSUED These letters direct the individual or business to cease violations of laws or rules. ENTITY Jerry Atzbach Lee Daugherty Jameson Gilis Sultan Hussain Kyle Low Travis L. Masters Diana Matthis Morgan’s Auto Performance Jeff Redpath Kody Spangler Sweet, Mark & Derick Shawn Taylor Terry Taylor Robert John West Ted Whitna J. R. Willougbly

TYPE VIOLATION CITY used dealer Owasso used dealer Newcastle used dealer Oklahoma City insurance pool Oklahoma City used dealer Broken Arrow insurance pool Oklahoma City used dealer Mustang used dealer Cushing dismantler Oklahoma City used dealer Madill used dealer Tulsa dismantler Cartwright insurance pool Spencer insurance pool Oklahoma City used dealer Newcastle used dealer Ada

DATE ISSUED 09/09/10 09/01/10 09/17/10 09/03/10 09/28/10 09/17/10 09/03/10 09/22/10 09/05/10 09/02/10 09/29/10 09/02/10 09/17/10 09/03/10 09/01/10 09/10/10

CLOSED COMPLAINT REPORT

These are complaints that have been resolved one way or another. They do not necessarily reflect any wrongdoing on the part of dealers.

ENTITY

A Small Town Auto Sales Auto Connection Auto Connection Auto Solutions Autohaus Sports Cars, Inc. Automax Hyundai Automax Hyundai Isuzu Subaru Automax Hyundai South Barry Sanders Super Center Best Price Auto Sales Bob Howard Automall Bob Howard Automall Bob Howard Automall Bob Howard Nissan, Inc. Bob Howard Cadillac, LLC Bob Howard Cadillac, LLC Bob Howard Cadillac, LLC Car Mart #4 Crystal City Motor Co., LLC David Stanley Chevrolet, Inc. David Stanley Chevrolet, Inc. David Stanley Chevrolet, Inc. David Stanley Dodge, LLC Dowdell Motors, LLC Edmond Auto Brokers Eldorado Motors, LLC #1 Eldorado Motors, LLC #1 Fisher’s Auto Mall, Inc. Fox Motors Guaranteed Auto Credit, Inc. Guaranteed Auto Credit, Inc. Guaranteed Auto Credit, Inc. Ital Auto Janzen GMC Truck Jim Lyons Motors Jim Norton Toyota of Lawton King’s Auto Sales Lawton Chry Jeep Dodge/B.Alstatt Metro Auto Wholesale Miami Auto Supercenter, Inc. Newell Coach Corporation Ozzie’s Motor Co., LLC Phil’s Deals On Wheels, LLC Ray Hibdon’s Car Choice, LLC S & S Foreign Cars Slader Auto Sales Texanna Used Cars

CITY

Kellyville Oklahoma City Oklahoma City Oklahoma City Midwest City Del City Norman Oklahoma City Stillwater Oklahoma City Oklahoma City Oklahoma City Oklahoma City Edmond Oklahoma City Oklahoma City Oklahoma City Muskogee Tulsa Oklahoma City Oklahoma City Oklahoma City Midwest City Woodward Edmond Oklahoma City Oklahoma City Oklahoma City Glenpool Oklahoma City Oklahoma City Oklahoma City Oklahoma City Enid Pryor Lawton Oklahoma City Lawton Tulsa Miami Miami Oklahoma City Mustang Del City Oakhurst Muskogee Checotah

COMPLAINT

title miscellaneous title mechanical contract contract title title contract contract title contract contract contract contract contract contract contract miscellaneous contract contract contract title contract miscellaneous miscellaneous mechanical title contract miscellaneous contract contract contract mechanical title title title contract title contract contract contract mechanical miscellaneous title title miscellaneous

RESOLVED 09/30/10 09/13/10 09/28/10 09/23/10 09/08/10 09/27/10 09/14/10 09/14/10 09/03/10 09/01/10 09/27/10 09/06/10 09/08/10 09/30/10 09/30/10 09/28/10 09/30/10 09/27/10 09/13/10 09/08/10 09/10/10 09/24/10 09/28/10 09/23/10 09/03/10 09/08/10 09/30/10 09/01/10 09/29/10 09/29/10 09/03/10 09/03/10 09/29/10 09/03/10 09/13/10 09/27/10 09/27/10 09/30/10 09/13/10 09/13/10 09/30/10 09/15/10 09/09/10 09/16/10 09/20/10 09/13/10 09/14/10

LICENSES SUSPENDED OR ABANDONED

In other action, the following licenses were suspended or abandoned: Adventure Truck Sales – Ponca City – Out of business; phone disconnected. Automax Hyundai of Broken Arrow – Broken Arrow – Out of business; change of ownership. B-Mac Motors – Shawnee – Out of business; phone disconnected. Foraten Auto Sales – Oklahoma City – wholesale license– Out of business; applied for retail license. Fenton Motors of Stillwater – Stillwater – Out of business; change of ownership. Good Ole Used Cars – Lawton – Out of business; per Investigators report. Renegade Motor Company – Oklahoma City – Out of business; failure to complete change of condition.

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Used Motor Vehicle

The Commission approved the following Consent Agreements: (I) A Consent Agreement between UMV&PC and Drive Time Car Sales Company, LLC, a limited liability company, a licensed used motor vehicle dealer, hereinafter referred to as “Respondent.” The following is a summary of the facts concerning the investigation by Commission personnel of the above referenced Respondent, the violations of the used motor vehicle licensing laws and/or Rules of the Commission, the possible sanctions which may be imposed, and the sanctions that the Respondent has agreed to in order to resolve this investigation. Respondent has failed to properly use or maintain a record of the use, of its temporary used motor vehicle license plates. An audit of Respondent’s records indicated that twenty-three temporary license plates could not be accounted for or were misused. Respondent has had its personnel attend the Commission’s Education Program since the audit of Respondent’s records. Respondent acknowledges that in the event of a hearing before the Commission, the sanctions could, in addition to the assessment of fines within a range of One Hundred Dollars ($100) up to One Thousand dollars ($1,000) per violation, include suspension or revocation of Respondent’s used motor vehicle dealer’s license. Respondent agrees to pay to the Used Motor Vehicle and Parts Commission for said violations as follows as full and complete disposition of this matter: Respondent therefore agrees that it will pay to the Used Motor Vehicle and Parts Commission the sum of Two Thousand Three Hundred Dollars ($2,300), payable on the first day of the month following the month in which the Commission approves this Consent Agreement. In the event the sum is paid as agreed, said payment will constitute full and final action on all violations pending or known to the Commission and which may be charged against Respondent at the time of this agreement. In the event said sum is not paid as agreed, Respondent acknowledges that further action may be taken, which may include a formal hearing for the revocation of Respondent’s used motor vehicle dealer’s license. (II) A Consent Agreement between UMV&PC and David Langford, on behalf of Your Choice Auto Sales, a licensed used motor vehicle dealer hereinafter referred to as “Respondent.” The following is a summary of the facts concerning the investigation by Commission personnel of the above referenced Respondent, the violations of the used motor vehicle licensing laws and/or Rules of the Commission, the possible sanctions which may be imposed, and the sanctions that the Respon-

dent has agreed to in order to resolve this investigation. 1. Respondent has failed to include two (2) persons who had an ownership interest in Your Choice Auto Sales on the application for a used motor vehicle dealer’s license. Respondent agrees that the renewal application will include any persons who have an ownership interest in the business. 2. Respondent failed to deliver certificates of title to two (2) vehicles sold within thirty (30) days of the sale of the vehicles. 3. Respondent misused at least two (2) temporary license plates by using them as “Demo” tags. 4. Respondent could not account for at least one (1) temporary license plate. 5. Respondent failed to use a tax stamp on an assignment of a certificate of title. 6. Respondent held certificates of title until purchasers picked them up rather than mailing them, used a non-conforming form for the purpose of charging repossession fees and late charges, some of which would not be authorized by law, failed to completely fill out bills of sale, Buyer’s Guides, and failed to make copies of certificates of title to vehicles sold. 7. Respondent has agreed that anyone responsible for completing the forms required in the used motor vehicle sales business will attend the Commission’s Education Program as soon as there is capacity available in the Program. 5. Respondent acknowledges that in the event of a hearing before the Commission, the sanctions could, in addition to the assessment of fines within a range of One Hundred Dollars ($100) up to One Thousand Dollars ($1,000) per violation, include suspension or revocation of Respondent’s used motor vehicle dealer’s license. 6. Respondent agrees to pay to the Used Motor Vehicle and Parts Commission for said violations as follows as full and complete disposition of this matter: Respondent therefore agrees that it will pay to the Used Motor Vehicle and Parts Commission the sum of One Thousand Six Hundred Dollars ($1,600), payable in the amount of Two Hundred Seventy-five Dollars ($275) per month for five months, and a final payment of Two Hundred Twenty-five Dollars ($225), beginning on the first day of the month following the month in which the Commission approves this Consent Agreement. In the event the sum is paid as agreed, said payment will constitute full and final action on all violations pending or which may be charged against Respondent at the time of this agreement. In the event said sum is not paid as agreed, Respondent acknowledges that further action may be taken, which may include a formal hearing for the revocation of Respondent’s used motor vehicle dealer’s license.

& Parts Commission Report

(III) A Consent Agreement between UMV&PC and Keith Humphries, on behalf of I-35 Auto Auction of Pauls Valley, Inc. an Oklahoma Corporation, a licensed used motor vehicle dealer, hereinafter referred to as “Respondent.” The following is a summary of the facts concerning the investigation by Commission personnel of the above referenced Respondent, the violations of the used motor vehicle licensing laws and/or Rules of the Commission, the possible sanctions which may be imposed, and the sanctions that the Respondent has agreed to in order to resolve this investigation. 1. Respondent has obtained certificates of title from Rex Powers, an individual, which were not titled in Rex Powers’ name, and accepted them without requiring that they be titled in his name. 2. Respondent, in failing to require that the titles be titled in Rex Powers’ name allowed Rex Powers to avoid payment of the proper registration, license fees and excise taxes due the State of Oklahoma. 3. Respondent acknowledges that in the event of a hearing before the Commission, the sanctions could, in addition to the assessment of fines up to One Thousand Dollars ($1,000) per violation, include suspension or revocation of Respondent’s used motor vehicle dealer’s license. 4. Respondent agrees to pay to the Used Motor Vehicle and Parts Commission for said violations as follows as full and complete disposition of this matter: Respondent therefore agrees that it will pay to the Used Motor Vehicle and Parts Commission the sum of Three Thousand Three Hundred Dollars ($3,300), payable in the amount of One Thousand One Hundred Dollars ($1,100) per month for three months, beginning on the first day of the month following the month in which the Commission approves this Consent Agreement. In the event the sum is paid as agreed, said payment will constitute full and final action on all violations pending or which may be charged against Respondent at the time of this agreement. In the event said sum is not paid as agreed, Respondent acknowledges that further action may be taken, which may include a formal hearing for the revocation of Respondent’s used motor vehicle dealer’s license. (IV) A Consent Agreement between UMV&PC and Deb Gillum, on behalf of Deb Gillum Auto Sales, a sole proprietor, a licensed used motor vehicle dealer hereinafter referred to as “Respondent.” The following is a summary of the facts concerning the investigation by Commission personnel of the above referenced Respondent, the violations of the used motor vehicle licensing laws and/or Rules of the Commission, the possible sanctions which may be CONTINUED ON NEXT PAGE

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Used Motor Vehicle

& Parts Commission Report

imposed, and the sanctions that the Respondent has agreed to in order to resolve this investigation. 1. Respondent has obtained certificates of title from Rex Powers, an individual, which were not titled in Rex Powers’ name, and accepted them without requiring that they be titled in his name. 2. Respondent, in failing to require that the titles be titled in Rex Powers’ name allowed Rex Powers to avoid payment of the proper registration, license fees and excise taxes due the State of Oklahoma. 3. Respondent acknowledges that in the event of a hearing before the Commission, the sanctions could, in addition to the assessment of fines up to One Thousand Dollars ($1,000) per violation, include suspension or revocation of Respondent’s used motor vehicle dealer’s license. 4. Respondent agrees to pay to the Used Motor Vehicle and Parts Commission for said violations as follows as full and complete disposition of this matter: Respondent therefore agrees that it will pay to the Used Motor Vehicle and Parts Commission the sum of Two Thousand Two Hundred Dollars ($2,200), payable in the amount of Five Hundred Fifty Dollars ($550) per month for four months, beginning on the first day of the month following the month in which the Commission approves this Consent Agreement. In the event the sum is paid as agreed, said payment will constitute full and final action on all violations pending or which may be charged against Respondent at the time of this agreement. In the event said sum is not paid as agreed, Respondent acknowledges that further action may be taken, which may include a formal hearing for the revocation of Respondent’s used motor vehicle dealer’s license. HEARING ON A FORMAL COMPLAINT The Commission ruled on the following Case No. UD-10-02: John W. Maile, Executive Director of the Used Motor Vehicle and Parts Commission (hereinafter Movant), on behalf of the Commission filed a Formal Complaint as follows: Respondent Gibbs-Stallings Superstore, Inc. dba Heartland Chevrolet Buick Pontiac GMC Truck (hereinafter Heartland), a licensed used motor vehicle dealer in Holdenville, since 1994. Movant began an investigation of an individual, Rex Powers (hereinaf-

ter Powers), a previously licensed used motor vehicle dealer, who had purchased used motor vehicles from various used motor vehicle dealers in the area of Ada, Oklahoma. Movant’s investigator, John Lancaster (hereinafter Lancaster), in the course of the investigation, discovered that Powers had also purchased used motor vehicles from Respondent Heartland. In the course of the investigation, Lancaster discovered that the sellers, including Respondent, had assigned the certificates of title to the vehicles purchased by Powers to the eventual buyers of the vehicles, thereby “jumping titles,” omitting Powers from the chain of ownership to said vehicles. Lancaster determined that Respondent had jumped title to fifteen (15) vehicles sold to Powers. Movant believes Respondent has sufficient experience in the used motor vehicle business to know how to properly assign certificates of title, that Respondent was aware of who the purchaser of the vehicles was (to-wit Powers), and that there is no excuse or reasonable explanation for Respondent’s failure to properly assign the certificates of title. Movant believes that the State of Oklahoma was deprived of the revenue from the title transfer fees, excise tax and registration fees due by reason of the sale of the vehicles to Powers by Respondent’s actions. The law provides that a fine of One Hundred Dollars ($100) may be assessed for each instance that Respondent failed to properly reassign a certificate of title upon the sale of a used motor vehicle. Movant believes that it is appropriate that a fine be assessed against Respondent Heartland in the total amount of One Thousand Five Hundred Dollars ($1,500). Movant believes that a formal hearing on the above cited issues is necessary and that fines be assessed pursuant to the statute and the facts as applied to said statute. Accordingly, Movant requests that after hearing the Commission assess said fines. THEREFORE, Movant requests that this matter be set for a formal hearing and that Respondent be required to appear at hearing before this Commission and answer the above allegations. Further, that said hearing to be held pursuant to the Oklahoma Administrative Procedures Act. Following an Executive Session, a motion was properly made, seconded and passed to assess the $1,500 fine as recommended by staff.

BY LEE DOMINGUE, CEO OF INDIRECT LENDING, WOLTERS KLUWER FINANCIAL SERVICES

BEWARE OF COMPLIANCE ISSUES FACING DEALERS IN 2011 Year-end is generally a time of reflection for many people. We consider the past year, what has occurred, how we have responded, and look ahead to how we can improve. From a business standpoint, it is

a very helpful exercise—especially when considering how you can prepare for the year ahead. As your dealership plans for 2011, here are three top compliance issues to consider: Consumer Financial Protection Bureau – This new regulatory agency was formed to help protect consumers from abusive financial products. It will be funded by the Federal Reserve and will ultimately write and enforce rules related to loans and other products in the financial services industry. CFPB head Elizabeth Warren has said she supports a principles-based regulatory system versus one that’s rules-based as a way to provide clear disclosures rather than rules that state what you can and cannot do. All dealerships will need to pay close attention, as federal principles-based laws could impact state laws and the current safe harbors in place. Red Flags Rule – While you’ve probably already heard a lot about this rule (which requires implementation of a written identify theft program) because it became effective in 2008, dealers must remember that the Federal Trade Commission’s new enforcement date is Dec. 31, 2010. It’s also important to note that this is just one law among many that affect the way consumer data is protected. This is a trend that will undoubtedly continue into 2011 and beyond—especially as the methods by which we transfer information continue to change with the evolution of technology. Risk-Based Pricing Rule – This new rule, which takes effect Jan. 1, 2011, requires companies that use a credit report or score in connection with a credit decision to send notice to a consumer when he or she is getting different credit terms than others based on credit information. The goal is to make sure consumers understand how their credit report data impacts their ability to obtain new credit. If you haven’t done so already, your dealership should sort through the notice options and evaluate loan underwriting processes. You need to determine if your business activity is covered by the requirements and if any exceptions apply. Remember, non-compliance penalties are steep, and some consumers might also try to recover damages under other legal theories. As any dealer who has weathered the last few years knows, regulatory issues aren’t going away. The dealerships that have remained strong are those that have focused on compliance. While it takes time and resources to invest in compliance, the costs are minimal when compared to potential fines and reputation damage. ABOUT THE AUTHOR: Lee Domingue is CEO of Indirect Lending at Wolters Kluwer Financial Services. To learn more, please visit www.wolterskluwerfs.com/ilsolutions.

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By David Angelicchio

Standards to Make Auctions Better for Customers The National Auto Auction Association (NAAA) is the leading remarketer of used vehicles in the world. NAAA

member auctions sell about nine million vehicles per year through the physical auction lanes and online. Over the past several years, NAAA has been focused on developing consistent standards and practices to be applied at all member auctions to enable customers to buy with more confidence from any auction they choose, whether they buy in-lane or online. The ultimate goals are to improve buyers overall auction experience and increase vehicle residuals. In connection with this renewed focus on standards, the Auction Standards Committee (ASC) was formed. It’s comprised of representatives from Manheim, ADESA, ServNet and independent auctions. Because of the complexity of the issues and their importance to the industry, the ASC also engages an outside industry consultant to assist in the development of policy. The ASC also works hand in hand

with other industry associations to help to ensure industry acceptance and endorsement of the standards and policies that are developed. The first area of focus for the ASC was the development of a revised arbitration policy. The arbitration standard was completed and approved by the NAAA board in October 2009 and became effective on January 1. This policy has been universally endorsed and adopted by NAAA member auctions and the rest of the vehicle remarketing industry. The next area of focus was the development of a standard wholesale certification standard. The ASC determined although buyers believed there was a definite value to wholesale certification, they were confused by the large number of programs and could not define them or quantify their value. In addition, the myriad of different policies created operational inefficiencies at the auction level. The ASC was charged with developing a standard certification program that combined the major elements of all the separate policies while maintaining individual company branding. After extensive study, the ASC – working with Agility Consulting and the IARA – developed the NAAA Certification Standard, approved by the NAAA board in September. This standard has been endorsed by IARA and will become effective on Jan. 1, 2011. The marketing materials for this program are being prepared and

will be available soon. The ASC also has developed a process to receive comments on all NAAA standards so they can continually be updated. The committee will continue to look at other areas of standardization including vehicle grading. As the leader in vehicle remarketing, NAAA is committed to the continued development of consistent auction standards and practices in order to provide the best possible service to the dealers. All NIADA members and dealers seeking full detail on national vehicle condition standards in place at NAAA auctions beginning next month should visit www.NAAA.com and click on Standards. David Angelicchio is chairman of the board and past president of NAAA, which represents more than 317 auto auctions both domestic and international, with more than 8.9 million units sold each year. He is the general manager of the Pittsburgh (Pa.) Independent Auto Auction.

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Credit Score

Page 2 of Model form B-4 Credit Score Exception Understanding Your Credit Score (continued) Key factors that [Insert first factor] adversely affected [Insert second factor] your credit score [Insert third factor] [Insert fourth factor] [Insert fifth factor, if applicable] Checking Your Credit Report What if there are You have a right to dispute any inaccurate information in your credit report. If you find mistakes on your credit report, contact the consumer reporting agency. mistakes in your It is a good idea to check your credit report to make sure the information it contains is credit report? accurate. How can you obtain a copy of your credit report?

How can you get more information?

Under federal law, you have the right to obtain a free copy of your credit report from each of the nationwide consumer reporting agencies once a year. To order your free annual credit report – By telephone: Call toll-free: 1-877-322-8228 On the web: Visit www.annualcreditreport.com By mail: Mail your completed Annual Credit Report Request Form (which you can obtain from the Federal Trade Commission’s website at http://www.ftc.gov/ bcp/conline/include/requestformfinal.pdf) to: Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348-5281

For more information about credit reports and your rights under federal law, visit the Federal Reserve Board’s website at www.federalreserve.gov, or the Federal Trade Commission’s website at www.ftc.gov.

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